New road funding sources needed by state

SCRAPPING THE STATE INCOME TAX ... declaring a sales tax holiday one weekend a year ... cutting tax rates. There’s never a shortage of ideas on ways to give taxpayers a break.

Conventional conservative wisdom is that cutting rates puts more money into the hands of people who will spend it, thus creating more jobs, which in turn creates more tax revenue. They also believe the opposite is true about tax increases.

That makes sense. But there’s another piece of conservative wisdom that we also need to remember: Pay your own way.

These sometimes conflicting ideologies are colliding in how we pay for transportation projects. A recent study by the nonpartisan Tax Foundation spells out the problem. The study using 2011 numbers found that various user fees - gasoline taxes, tolls and vehicle registration fees - cover only about half of the actual cost of state and local spending on roads.

State and local governments spent $153 billion on roads in 2011, the study said, “but raised only $77.1 billion in user fees and user taxes. The rest was funded by $30 billion in general state and local revenues and $46 billion in federal aid.”

Good roads, bridges and public transportation provide a public benefit because they improve the business climate. But as the Tax Foundation report notes, “Subsidizing road spending from general revenues creates pressure to increase income or sales taxes, which can be unfair to nonusers and undermine economic growth for the state as a whole.”

The study showed Wisconsin faring worse than the national average in the percentage of road costs paid by users at under 44 percent. Gasoline taxes covered only 27 percent of the cost, license and registration fees covered just 12.5 percent, and tolls and user fees picked up just 4.3 percent.

“When road funding comes from a mix of tolls and gasoline taxes, the people who use the roads bear a sizeable portion of the cost,” said Tax Foundation Vice President of State Projects Joseph Henchman. “By contrast, funding transportation out of general revenue makes roads ‘free,’ and consequently, overused or congested - often the precise problem transportation spending programs are meant to solve.”

The disconnect between who uses transportation systems and who pays isn’t just drivers. The study also found mass transit systems cost $58.7 billion in 2011 but collected only $13.2 billion in fares. Airports cost taxpayers $22.7 billion, but only $18.8 billion in user fees were collected.

Nobody likes paying tolls, higher gas taxes and vehicle registration fees, etc. But if we ignore the link between who pays and who benefits and simply pile more of the cost on the general budget, it eventually leads to more borrowing and less money for other things.

Lawmakers have in recent budgets cut aid to the UW System to pay for other government programs, mainly Medicaid. The lawmakers know that students and their parents can pay higher “user fees,” if you will.

Sooner rather than later the same lawmakers need to make some difficult but necessary decisions about paying for our roads and other transportation programs. Users paying less than half the actual cost is going to catch up with us. — Eau Claire Leader Telegram, Jan. 13

At issue:
Funding highway projects
Bottom line:
Pay your own way


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